NYU Director Embezzled Funds for Home Renovation, Prosecutors Say

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A director of finance and research at New York University diverted millions in funds intended for minority- and woman-owned businesses, putting them in shell companies and using some of the money to renovate her Connecticut home and build a swimming pool, the Manhattan district attorney’s office said Monday. The director, […]

A director of finance and research at New York University diverted millions in funds intended for minority- and woman-owned businesses, putting them in shell companies and using some of the money to renovate her Connecticut home and build a swimming pool, the Manhattan district attorney’s office said Monday.

The director, Cindy Tappe, 57, who left N.Y.U. after her actions were discovered in 2018, was charged by the office with money laundering and grand larceny, as well as other crimes, for what prosecutors said was a six-year scheme in which she redirected $3.3 million from New York State education grants to the shell companies, which she had created.

Using those companies, prosecutors said, she spent more than $660,000 on personal expenses, including the $80,000 swimming pool. She used other portions of the money on expenses related to the grants or to reimburse employees of the private university, allowing her to keep up appearances.

In a statement, the Manhattan district attorney, Alvin L. Bragg, said that the scheme, which began in 2012, had harmed “our city’s minority- and women-owned business enterprises by denying them the chance to fairly compete for and secure the funding.”

The case was brought to the district attorney’s office by the state comptroller, after the school discovered Ms. Tappe’s actions and reported them.

“Cindy Tappe used her high-ranking position at N.Y.U. to divert more than $660,000 in state funds to companies she controlled to fund a lavish lifestyle,” said the state comptroller, Thomas P. DiNapoli, in a statement.

A lawyer for Ms. Tappe, Deborah A. Colson, declined to comment.

Prosecutors said that Ms. Tappe’s scheme had begun with $23 million in grant money awarded to an N.Y.U. center where she worked. The money was meant to go toward the administration of two state programs: one that helps school districts improve results for students learning English and another that addresses unequal treatment of students in special education.

The terms of the grants required that a certain percentage of the money awarded to the center go to women- and minority-owned businesses, which would then administer those programs. But prosecutors said that Ms. Tappe had instead shuffled $3.5 million through a small group of subcontractors, who, after taking a small percentage for themselves, sent roughly $3.4 million to the shell companies that Ms. Tappe had created.

Using those shell companies — High Galaxy and PCM Group — she then spent the money, including the hundreds of thousands of dollars that went to her own personal expenses.

Ms. Tappe was confronted by a program director at the school in 2018, and emailed the heads of the state programs to explain her actions. She told them that the school had “developed good working relationships” with the companies that the money was merely passing through, the district attorney’s office said.

The school reported the theft to the State Department of Education, which then informed the state comptroller’s office, which after its own investigation, referred Ms. Tappe’s case to Manhattan prosecutors.

The center where Ms. Tappe worked, the university’s Metropolitan Center for Research on Equity and the Transformation of Schools — often called the Metro Center — is a nonprofit housed within N.Y.U.’s Steinhardt School of Education. It was founded in 1978 and works to further equity in public education.

A spokesman for the school, John Beckman, noted that N.Y.U. had detected the suspicious activity itself, had reported the activity to the state and had cooperated fully with the agencies involved. He said that Ms. Tappe had not been employed by N.Y.U. since the conduct was discovered in 2018.

“We are deeply disappointed that an employee abused the trust we placed in her in this way, and we are pleased to have been able to assist in stopping this misdirection of taxpayer money,” Mr. Beckman said.

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